Private enterprise broadband providers ignoring the growing digital divide should expect competition from local municipalities. That's the role of local governments, says one of the nation's leading proponents of municipal Wi-Fi.

As Philadelphia's chief information officer, Dianah Neff knows all about the contentious debate going on between cities wanting to offer broadband as just an utility among companies that don't think government should be in the business of competing against private enterprise.

Convinced that local private providers were not deploying broadband services fast enough to poor or underserved areas of Philadelphia, Neff is leading a municipal effort to provide wireless broadband to the entire city.

Funded by taxpayers, the city plans to build out the network and sell wholesale access to Internet service providers and telecom firms.

"The digital divide is local. Spurring economic development is a local issue," Neff told a U.S. Chamber of Commerce luncheon in Washington earlier this week. "We believe that there is space in this marketplace. We're about open competition. We're not about exclusivity. We're not about setting special rules for anybody."

Neff said Philadelphia is planning a wide-ranging program beyond just providing broadband, including making the service available in light industrial areas in order to attract new businesses into the neighborhoods.

Philadelphia's decision set off a firestorm of debate that is still raging in state legislatures. Now, it's spread to Congress. In December, Pennsylvania lawmakers granted Philadelphia an exemption but otherwise passed legislation restricting municipal-backed broadband services.

On Capitol Hill, bills both banning and promoting municipal broadband services have been introduced in just the last month.

Neff said 58 percent of Philadelphia's population has access to the Internet. In its more affluent neighborhoods, the number is more than 90 percent. In low income and minority neighborhoods, through, the numbers tumble to as low as 10 percent.

"We cannot afford to lose those neighborhoods," Neff said. "We want to ensure that our families and children have the abilities they need to compete in the 21st Century."

Former Legg Mason telecom analyst Michael Balhoff, however, told the luncheon crowd that municipal broadband is simply bad public policy.

"It's a waste of the assets of municipalities to dedicate resources to [compete] with the private sector," he said. "The fundamental problem I have is the risk that is inherent when the municipality can, through the direct use of its rights of way and its other assets, undercut private investment."

In his view, Wi-Fi in particular is a bad bet for cities.

"It doesn't have the capacity to ultimately serve businesses," said Balhoff, now a partner at Balhoff and Rowe. When he was at Legg Mason, Balhoff said security issues ruled out wireless.

"There's no way a business like ours is willing to put its business assets at risk in wireless environment," he said.

Northwestern University law professor James Speta added that the immature wireless marketplace is risky business for local governments. Unlike established utilities like electricity and water, Speta said when it comes to wireless broadband, "We still don't know what's in the future."

Speta suggested cities wanting to close the digital divide would be better off providing vouchers for broadband Internet access.

Originally published on .

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